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Should I Take Money From My IRA to Avoid PMI on My New Mortgage? – Dave

I am 60. I have $200K in IRA. Just bought home 1 yr ago with minimum down on a 5% FHA loan. Value is $265K, balance is about the same. I’m paying ~$1650/mo including PMI/FHA insurance and property taxes at 1%.

With interest rates now in the 4% range for 30 year fixed, 3.75% for 20 year fixed and around 3.5% for 15 year fixed, I am planning to re-finance.

I would like to retire at 67 years old but have only the IRA and will have about $2600/mo from Social Security (between my wife and myself).

Should I simply refinance at the 4%/30 yr. fixed rate and drop to about $1480/mo including PMI?

OR, should I take enough out of IRA to put ~$53K on the loan to pay it down to where we no longer have PMI and with the lower balance, drop the payment to about $1230/mo (at 4%/30 year fixed)?

Dave




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Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.


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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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